Too many lawyers have the misconception that flat fees are only appropriate for small, simple matters such as basic wills and trusts or entity formation. There is, however, a much broader range of work where flat fees are appropriate. Flat fees should be considered when one of the following factors is present:
- The value you provide in expertise is greater than the time you’ll spend. If you’ve been in your practice area for 10+ years, you likely have a level of expertise that means you don’t have to spend as much time researching as you once did. You know the issues your clients face, and you can apply your knowledge quickly. In a case like this, charging by the hour isn’t an effective way to value your work. If you want to avoid charging less and less for more and more expertise, consider a flat fee.
- Your work spans a short period of time. When a lawyer provides a lot of value quickly, it can be cumbersome to charge the client on an hourly basis and then bill them monthly. Doing so runs the risk that you’ll have to collect from the client after completing your work – once you’ve lost a lot of leverage. In this scenario, using a flat fee can serve to avoid collections issues.
When both factors are present, it is more likely that a flat fee can be substantial. It is not uncommon for appellate lawyers to ask clients to pre-pay most of the fee for a brief that needs to be drafted in 30-45 days, and that can easily run into the high five figures or beyond. Likewise, corporate internal investigations, especially involving white collar criminal matters, often command significant flat fees.
Charging and collecting a flat fee does raise some specific accounting issues, so be sure to comply with your jurisdiction’s rules. For instance, Rule 1.15(b) of the State Bar of California’s Rules of Professional Conduct, which was approved in November 2018, addresses when a lawyer charging a flat fee may withdraw money from their client trust account.
If you have only been charging hourly rates, it may be time to add flat fees to your repertoire.